U.S. Trade Representative Robert Lighthizer, showing impatience at the slow pace of the talks, said Mexico’s presidential election and the looming expiry of a congressional negotiating authorization in July put the onus on the U.S., Mexico and Canada to come up with a plan soon.

“We probably have a month, or a month and a half, or something to get an agreement in principle,” Lighthizer told reporters at the conclusion of a seventh round of talks to overhaul the North American Free Trade Agreement in Mexico City.

He was speaking after meeting Mexican Economy Minister Ildefonso Guajardo and Canadian Foreign Minister Chrystia Freeland for a joint event marked by a more cordial mood than in previous rounds, despite major disagreements over U.S. President Donald Trump’s plan to impose steel tariffs.

Trump has threatened to dump NAFTA unless it boosts U.S. manufacturing and employment, arguing the 1994 accord has caused the migration of jobs and factories southward to lower-cost Mexico.

Guajardo told reporters the three countries aimed to hold lower-level discussions on NAFTA over the next five weeks before an eighth round, probably in early April.

During that period, he and his two counterparts also aimed to meet to narrow differences on the most complex issues in the talks, which include agreeing on new auto content rules, a dispute-resolution mechanism and agricultural market access.

Lighthizer said time to rework the deal was running “very short” and again raised the possibility of the U.S. pursuing bilateral deals with its partners — albeit stressing that his government would prefer a three-way agreement.

He said the U.S. was making more headway with its southern neighbour than with Canada.

Freeland declined to give details on a prospective timeline for the next round and said alongside Lighthizer that Trump’s plan to impose a 25 per cent tariff on steel imports and a 10 percent tariff on aluminum imports was “unacceptable.”

U.S. trade promotion authority (TPA) is authorized by Congress and is needed to implement legislation for new trade agreements such as the renegotiation of NAFTA. The TPA expires on July 1 and analysts expect it to be extended.

The U.S. also holds congressional elections in November.

Tariff exemption lure

Early on Monday, the U.S. president ratcheted up tension before the ministerial meetings in Mexico by tweeting that “Tariffs on Steel and Aluminum will only come off if new + fair NAFTA agreement is signed.”

Lighthizer said that meant Canada and Mexico would enjoy tariff exemptions once a NAFTA deal was reached, calling the tariffs an “incentive” to conclude the talks.

Canada and Mexico say they should be exempted from such moves, and have warned they could retaliate.

Guajardo said there would be no concessions made in the NAFTA negotiations to placate Trump on steel and aluminum, while Freeland said the two issues were separate.

Guajardo urged all sides, however, to avoid a trade war and said Mexico would wait for a U.S. decision. If the U.S. did impose tariffs, a response should be tailored to the sector in question to avoid complicating other issues, he added.

“Contaminating strategies just ends up making you escalate the nature of the conflicts,” Guajardo said.

Trump early Monday also tweeted that Canada “must treat our farmers much better. Highly restrictive,” and Mexico “must do much more on stopping drugs from pouring into the U.S.”

Talks to overhaul the 24-year-old pact are moving slowly, in part because Canada and Mexico have resisted U.S. demands to boost the North American content of autos produced inside NAFTA.

When asked about the discussions on the rules of origin for autos, Guajardo noted that no trade deal could depend only on the interests of one particular sector.

Although Mexico holds its election in July, it will not change governments until December, and Guajardo pledged to keep negotiating for as “as long as necessary” while President Enrique Pena Nieto’s administration is in office.

Lighthizer said only six chapters had been concluded since talks began in August. Negotiators are working on 30 chapters overall, he said, including a new one on energy.

Uncertainty over the talks, and the potential for a wider global trade war, are making investors nervous.

During the latest round, negotiators concluded talks on rules governing food safety and animal health, good regulatory practices, plus administration and publication, officials said.

— Reporting for Reuters by Lesley Wroughton and Sharay Angulo; additional reporting by David Ljunggren, Dave Graham, Adriana Barrera and Anthony Esposito in Mexico City and Fergal Smith in Toronto; writing by Lesley Wroughton and David Ljunggren. Includes files from AGCanada.com Network staff.

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The “intersessional” round in Washington, which did not include trade ministers from the U.S., Canada and Mexico, were largely aimed at preparing groundwork for a pivotal round of talks in January in Montreal.

Thus far, Canada and Mexico have not offered counterproposals to the Trump administration’s automotive demands that half the content for North American-made vehicles come from the United States along with sharply higher regional content, a proposal that would dramatically reshape the industry.

Canada and Mexico rejected the U.S. proposal as unworkable last month in Mexico City, but some officials said they expect alternatives to emerge in Montreal.

“There wasn’t much of a discussion on autos” at the Washington talks this week, Mexican chief negotiator Ken Smith told reporters.

“So we’ll take that conversation up again in Montreal, and hopefully, what I told my U.S. counterparts, is that we should start a dialogue that takes into consideration the position of the industries of the three countries because we cannot operate in a vacuum.”

U.S. Trade Representative Robert Lighthizer has repeatedly expressed frustration that Canada and Mexico have not accepted his demands in autos and other areas to “rebalance” the trade agreement to shrink U.S. trade deficits.

“The United States continues to look for serious engagement and meaningful progress in these talks for a modernized and rebalanced NAFTA,” USTR spokeswoman Amelia Breinig said in a statement on Friday as the talks wound down.

But she said the three countries did manage to substantively complete a sectoral annex on energy efficiency standards, marking the first time a NAFTA chapter had closed since September.

— Reporting for Reuters by David Lawder and Lesley Wroughton.

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Mexican sources say the plan is to hold seven rounds of talks at three-week intervals, a schedule that trade experts warned was aggressive and not easily attainable.

Mexico’s ambassador to the U.S., Geronimo Gutierrez, said his country wanted to get the negotiations over before a presidential election campaign ramps up next year.

Gutierrez said no country would want trade discussions during a campaign.

“That is not wise… because it becomes a Christmas tree, everybody wants to hang something onto the Christmas tree,” he told an audience at the Washington International Trade Association conference.

U.S. officials say there is growing concern within the administration, business community, and among U.S. lawmakers that the policies of President Donald Trump could embolden anti-U.S. populist Andres Manuel Lopez Obrador.

The Trump administration released its objectives for the talks on Monday. The first round will start on Aug. 16.

Gutierrez said there was still a possibility that Trump could back out of the talks.

“In all honesty, I can’t say that risk has been completely dismissed,” he said, “No one would sit down and negotiate under a strong threat that at any time he would pull out.”

Gutierrez said all three governments agreed that uncertainty over the future of the North American Free Trade Agreement had to be dealt with quickly.

“Investment decisions throughout North America have been, to the best of my knowledge, postponed because of uncertainty,” he said without elaborating.

Still, the Philadelphia Federal Reserve said on Thursday its index of current business conditions in the mid-Atlantic region had fallen to a reading of 19.5 this month, the lowest since last November, from 27.6 in June.

A gauge of future capital spending increased 13 points, with 43 per cent of firms indicating they planned to boost spending over the next six month, it said.

David MacNaughton, Canada’s ambassador to Washington, said while it would be a challenge to finish negotiations over just four months, it was possible.

“I do genuinely think all three parties want to find a solution to this because (of) the uncertainty that has been created… people defer making decisions,” said.

Canadian and Mexican officials met in Ottawa on Wednesday but spent little time on substance of the talks, given uncertainty over how much could be achieved by the end of 2017, said a well-placed source. “There’s a 99 per cent chance the negotiations won’t be finished by then,” said the source.

The three nations will also require all those involved, including stakeholders and lobbyists, to sign non-disclosure agreements.

A Canadian official said the move was designed to allow officials “to have frank conversations knowing it won’t be in the public domain two hours later.”

— Reporting for Reuters by Lesley Wroughton in Washington and David Ljunggren in Ottawa.

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In a much-anticipated document sent to lawmakers, U.S. Trade Representative Robert Lighthizer said he would seek to reduce the trade imbalance by improving access for U.S. goods exported to Canada and Mexico under the three-nation pact.

For the first time in a U.S. trade deal, the administration also said it wants an “appropriate” provision to deter currency manipulation by trading partners. The move appeared aimed at future trade deals rather than specifically at Canada and Mexico, which are not considered currency manipulators.

The 17-page document asserted that no country should manipulate its currency exchange rate to gain an unfair competitive advantage, an often-cited complaint about China in past years.

Shortly before the release of the document, President Donald Trump lashed out against trade deals and unfair trade practices, saying he would take more legal and regulatory steps during the next six months to protect U.S. manufacturers.

Canada’s Foreign Affairs Minister Chrystia Freeland said the U.S. list was “part of its internal process” although a source familiar with Canadian government thinking said the document was “not earth shattering.”

Trade experts have argued that shrinking the yawning U.S. trade deficit will not be achieved by revising trade deals but rather by boosting U.S. savings.

“The first bullet point shows their preoccupation with bilateral trade deficits, and that’s unfortunate,” said Chad Brown, a senior fellow and trade expert at the Peterson Institute for International Economics. “There’s not much that trade policy and trade agreements can do to change those. That’s more of a macroeconomic issue.”

Among the priorities, Lighthizer said the administration would seek to eliminate a trade dispute mechanism that has largely prohibited the U.S. from pursuing anti-dumping and anti-subsidy cases against Canadian and Mexican firms.

There was no mention of active disputes between the U.S. and Canada over softwood lumber and dairy products, but the document targeted a range of agricultural non-tariff barriers, including subsidies and pricing structures, that are currently at the heart of those standoffs.

USTR said it would seek to strengthen NAFTA’s rules of origin to ensure that the pact’s benefits do not go to outside countries and to “incentivize” the sourcing of U.S. goods. It offered no details on such incentives and did not specify how much of a product’s components must originate from NAFTA countries.

No date has been announced for the NAFTA talks, but they are expected in mid-August.

Automakers support stance

Matt Blunt, president of the American Automotive Policy Council, a group representing U.S. automakers, welcomed the decision to include in the list of objectives the removal of regulatory barriers and the provision on currency manipulation.

A spokesman for Ford Motor Co said: “Foreign currency manipulation is the 21st century trade barrier, and we strongly support the inclusion of this top-tier issue in the U.S. negotiating objectives for NAFTA. We look forward to working with the administration to achieve this objective by including strong and enforceable currency prohibitions as part of NAFTA.”

The document also outlined plans to upgrade standards for labor and the environment and govern digital trade. Canada and Mexico have already agreed to upgrade these areas as part of the defunct Trans-Pacific Partnership trade deal.

Representative Sander Levin, a Democrat from Michigan, said there was nothing in the document that would change the way Mexico treated its workers.

“Mexico has used their workers having no rights and suppressing labor costs as a key part of their industrial policy,” he said, “There is nothing in the summary that assures in these vital aspects that a new NAFTA will be different than the old.”

There was no formal reaction to the letter from Mexican government.

Earlier on Monday, AFL-CIO President Richard Trumka said NAFTA had been an “unequivocal failure” and should be completely renegotiated.

“We will do everything we can to make this a good agreement and to hold the president at his word and make sure we get a renegotiation,” the head of the 12.5-million strong union umbrella group told a conference call with reporters.

“If it comes out that it is not a good deal, no deal is better than a bad deal,” Trumka said.

NAFTA has quadrupled trade among the three countries, surpassing $1 trillion in 2015, but the U.S. trade deficit with Mexico exceeded $63 billion last year.

— Reporting for Reuters by Lesley Wroughton and David Lawder; additional reporting by David Shepardson.

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Just five per cent of Africa’s cereal imports are now provided by African farmers, according to the report.

“Too often borders get in the way of getting food to homes and communities which are struggling with too little to eat,” said Makhtar Diop, World Bank vice-president for Africa.

The bank estimates that 19 million people are in danger of hunger and malnutrition in West Africa’s Sahel region. Yet, removing cross-border restrictions could help avoid food crises if farmers were allowed to trade more easily with each other and get food to communities facing shortages.

In addition, the World Bank estimated that fewer restrictions on food trade could generate an estimated $20 billion in annual earnings for African governments.

Food trade barriers also increase the cost to the consumer and the farmer, the World Bank said.

No incentive

For example, farmers on holdings in Africa who sell surplus harvest typically receive less than 20 per cent of the consumer price of their produce, with the rest being eaten up by various transaction costs and post-harvest losses.

“This clearly limits the incentive to produce for the market,” the World Bank said.

Soaring global food prices in 2008, which triggered social unrest in several African countries, highlighted the problem of decades of underinvestment in agriculture in Africa. It also stimulated interest among investors in Europe, the Middle East and Asia in Africa’s untapped farming potential. Fears of land grabbing also increased.

The World Bank said high transport costs were an impediment to more food trade across Africa, especially for small farmers. While poor roads and lack of infrastructure are a problem in Africa, transport cartels are also common with little incentive for investment in modern trucks.

Countries in West Africa could halve their transport costs within 10 years if governments undertook policy reforms, and took action on roadblocks and bribes at border posts that also add to the cost of getting food to markets.

More food trade in Africa could help raise yields, spread new technology and create jobs, it added. In some countries it takes two to three years for new seed varieties to be released.

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Oxfam urged Jim Yong Kim, the lender’s new president, to announce a six-month moratorium on land investments by the bank at meetings of the International Monetary Fund and World Bank in Tokyo next week.

But senior bank officials said it would be a mistake to suspend the World Bank’s involvement at a time when global food prices are rising and there is growing interest by foreign investors in buying farmland in Asia, Latin America and Africa.

The 2008-09 global food price crisis prompted a scramble for land in parts of Asia, Africa and Latin America, and widespread fears of land grabbing. Madagascar’s president was toppled in 2009 after he negotiated a deal with South Korea’s Daewoo Logistics to lease half the island’s arable land to grow food and ship it to Asia.

The World Bank has long argued that Africa needs more investments in agriculture that would not only help modernize farming practices but also create jobs and new markets for local farmers. The lender has boosted its investment in agriculture to $9.5 billion a year from $2.5 billion annually in 2008.

Oxfam said the World Bank was in a unique position, as both a financier, through its private-sector lending arm the International Finance Corp., and adviser to developing countries, to ensure land deals are transparent and not forcing local communities off land they have farmed for generations.

According to Oxfam more than 60 per cent of investments in agricultural land by foreign investors between 2000 and 2010 were in developing countries with serious hunger problems.

"The bank can set an example to investors and government that could help put a stop to these human rights abuses and ensure that investors genuinely help boost development in some of the poorest communities," Jeremy Hobbs, Oxfam’s executive director, said.

Juergen Voegele, director of the World Bank’s Agriculture and Rural Development Department, said the bank could be more effective by remaining involved while helping governments address the problem.

"We do not believe that Oxfam’s call for a moratorium on World Bank Group-related investments is an appropriate course of action at this point, particularly not at a time of rapidly rising and very volatile food prices," Voegele told Reuters.

"We certainly do not believe this will help reduce instances of abusive practices that are out there; we do know that, because it would clearly target the wrong stakeholders and the wrong audiences," he added. "We are the ones who are doing everything we can to improve these poor practices".

More transparent deals

Oxfam said, however, a moratorium would give the World Bank time to "put its own house in order" and send a clear signal to governments and investors it would not tolerate land grabbing.

It said the World Bank should insist on more transparency in land deals to limit abuses, ensure communities are informed so they can accept or refuse projects; and make sure that communities’ land rights are protected.

Many of the deals are government-to-government and there are questions whether investors pay fair prices for the land.

Voegele said over the past two years the World Bank had worked with foreign agencies and governments to draft voluntary guidelines on land investments.

"Just like Oxfam we are concerned these practices are not transparent and they are sometimes hurting poor farmers. Almost 90 per cent of what we do is helping smallholders get access to markets and increase productivity," he added.

Contrary to reports that China was leading the rush for land in developing countries, Voegele said investors from the U.S., Canada and Europe were also scooping up land abroad.

"Two or three years ago we found there was a lot more hype than actual action on the ground. Now that is changing a little bit, but at that time a very significant number of those deals were speculative deals — an announcement but nothing happened," he added.

"Speculative land investment is something neither the Bank nor the IFC supports because it does not help anybody."

Atul Mehta, IFC director for global manufacturing, agribusiness and services, said a moratorium could dissuade responsible investors and lead to more widespread abuses.

"The people who approach us more often or not are some of the best players who want to do things right. The ones that are not in that category quickly find they are not able to meet our standards," said Mehta.

— Lesley Wroughton writes on global development and international finance issues for Reuters from Washington, D.C.

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World Bank data released on Feb. 15 showed higher food prices – mainly for wheat, maize, sugars and edible oils – have pushed 44 million more people in developing countries into extreme poverty since June 2010.

“There is no room for complacency,” Zoellick told a conference call. “Global food prices are now at dangerous levels and it is also clear that recent food price rises are causing pain and suffering for poor people around the globe.”

Zoellick said although higher food prices were not the main cause leading to recent protests in Egypt and Tunisia, it was an aggravating factor and could become worse.

He warned that a sharp rise in food prices across Central Asia could also have social and political implications for that region.

Zoellick also said he was concerned that as countries such as Egypt, Tunisia and Jordan address causes of their social upheaval, higher food prices may add to “the fragility that is always there any time you have revolutions and transitions.”

The World Bank chief said the international community needed to be aware of such risks and should not exacerbate problems by imposing policies, such as export bans or price fixing, that would push global food prices even higher.

“There is no silver bullet to resolving the potent combination of rising and volatile food prices,” Zoellick said, “but food security is now a global security issue.”

NOT THE SAME EVERYWHERE

The Washington-based poverty- fighting institution said its food price index increased by 15 per cent between October 2010 and January 2011 and is just three per cent below its 2008 peak during the last food price crisis. This translates into a 29 per cent rise in food prices over the course of a year.

But unlike during the 2007-08 food crisis, higher prices have not yet affected all regions of the world.

Across Asia and in some parts of Latin America, Eastern Europe and Central Asia, costlier food is pushing up inflationary pressures.

“Central Asia is a region where these good prices have increased substantially and given the poverty levels… there is a real stress point that could have social and political implications,” Zoellick said.

Meanwhile, good harvests in Sub-Saharan Africa have so far spared that region from rising prices.

But he said it was disturbing to see maize prices soar about 73 per cent over six months, while prices for sugar and for fats and oils have risen 20 per cent and 22 per cent, respectively, in the past quarter alone.

The World Bank cautioned that rice prices needed monitoring given measures by some countries to significantly import more rice to boost domestic stocks.

He said there was less margin for error in Africa because of high poverty rates across the region, although he noted problems in Burundi and Cameroon where bean prices, an important food source, have risen by more than 40 per cent.

Surveys show that the poor spend more than 80 per cent of their total disposable income on basic foods, and if prices rise, poor families have few – if any – alternative but to eat less.

———

“Globalfoodprices arenowatdangerous levelsanditisalso clearthatrecentfood pricerisesarecausing painandsuffering forpoorpeople aroundtheglobe.”

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Food price volatility is here to stay, the World Bank cautioned, amid growing worries there could be another full-blown food crisis only three years after the last one.

In some parts of the world, weather-related supply shocks have pushed up prices, and there is a likelihood of substantial long-term increases. Food problems will be tackled at meetings of the Group of 20 major economies this year in France.

The possibility of a full food crisis “is a concern and countries should be getting ready for it,” said Hugh Bredenkamp, deputy director of the IMF’s Strategy, Policy and Review Department.

The IMF’s advice to governments faced with rising food prices is to focus social protection measures on the poorest; to resist export bans or export taxes that disrupt global food markets; and to ensure that higher food prices do not translate inadvertently into monetary policy tightening.

“The direct impact of food prices on CPI is a one-time thing, but in itself is not inflation, so countries should accommodate … set monetary targets to accommodate the direct impact from price jumps,” said Bredenkamp.

“But countries need to be careful not to allow second-round effects, so if food prices go up (they) don’t want that to spill into higher wages or prices of other products,” he added.

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“What we’re now moving into is the phase where one has to look more broadly at the danger of developing country growth and there it depends on policies they take and the support we and others can give them.”

With world attention trained on resolving a financial crisis in western economies, World Bank president Robert Zoellick said the poverty-fighting institution is warning developing countries to prepare for tougher times.

In an interview with Reuters ahead of meetings of world finance ministers, Zoellick said business failures, bank emergencies and balance of payments crises are all possible in developing countries as the crisis spreads.

He said a growing financial squeeze, together with higher food and fuel prices, will only make it more difficult for governments in developing countries to protect the poor.

A new World Bank report prepared for the meetings warns that high food and fuel prices will increase the number of malnourished people around the world in 2008 by 44 million to over 960 million.

The World Bank chief said the bank had identified around 28 countries that could face fiscal difficulties. “What we’re now moving into is the phase where one has to look more broadly at the danger of developing country growth and there it depends on policies they take and the support we and others can give them.”

“Over the medium and long term, I remain optimistic about the possibilities of sub-Saharan Africa being a pole of growth, but it won’t happen automatically, it will require their actions and the right investments,” he added.

Zoellick said the World Bank was working with developing countries to make them aware of the services the bank could provide to help prepare contingency plans and support countries whose banking systems may come under strain.

High stakes

The financial crisis threatens to undo much, or in some cases all, of the progress made in many developing countries over the past several years to lift growth and reduce poverty and disease.

Between 1997 and 2007, 17 countries in sub-Saharan Africa grew on average six per cent, most of them non-oil producers. Another eight countries, all oil producers, grew on average eight per cent over the same 10 years.

Zoellick told a news conference earlier there was frustration, fear and anxiety at the difficulties economies may now encounter from a crisis that began in the U. S.

Better economic management, fewer conflicts, and prospects of high returns on investments have attracted more private sector interest into developing countries.

Among those investors have been China, Brazil, India and Gulf countries, spurring so-called south-south investment where one emerging economy invests in another.

Despite ripple effects from the financial crisis into emerging economies, Zoellick said he was confident China would continue to invest in natural resources in Africa, while Gulf states look to investments in agriculture.

Just as western central banks and China took unprecedented co-ordinated action to cut interest rates on Oct. 8 to restore calm to markets, he hoped they would do the same when it comes to helping the developing world deal with effects from the financial crisis, but also the “human crisis” of increasing malnourishment.

The same countries could help by contributing to a World Bank fund to assist developing countries struggling with higher food and fuel prices and that would provide fertilizer to small farmers and energy to the poor.

There would also be a need for developed countries to help the World Bank and International Monetary Fund support governments facing balance of payments needs and challenges to do with climate change and trade, he said.

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The impact of higher global food prices was raised by leaders in speeches to the annual United Nations General Assembly gathering, where delegates are assessing how countries are faring in reaching UN goals to halve global poverty by 2015.

“The current food crisis is a heavy burden and poses many new challenges,” Madagascar’s President Marc Ravalomanana said.

He blamed the rise in food prices on subsidies for farmers in rich industrial nations that discourage farm production in developing countries.

“We are in a very difficult situation and are dependent on the global marketplace to feed our people because our agricultural output is so low,” he said. “With commodity prices soaring we cannot afford the basic food items needed to survive.”

Ravalomanana said African countries, in particular, would be unable to break the cycle of poverty if food prices remained high.

While prices of some staples have declined by around eight per cent from their peaks in June, they are still 44 per cent above 2006 levels. The World Bank has warned that 100 million more people could be pushed deeper into poverty by soaring food and fuel prices, which have pushed up fertilizer costs.

U. N. Secretary-General Ban Ki-moon told the 192 member states that in a single year, staple foods that feed half of the world more than doubled in price.

He urged rich donor nations to fulfil promises of aid to poor countries struggling to cope with higher prices.

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